Democratic senators are urging the FCC to approve the merger between Paramount and Warner Bros. until the foreign investment review of the deal is completed

Three Democratic U.S. senators are urging the FCC to prevent Paramount Skydance from completing its $111 billion merger with Warner Bros. Discovery until the government’s national security assessment of the foreign investors in the deal is completed.

In a letter dated June 18 to FCC Chairman Brendan Carr, the lawmakers — Sens. Cory Booker (DN.J.), Elizabeth Warren (D-Mass.) and Adam Schiff (D-Calif.) – Paramount’s April 24 petition seeking a declaratory judgment from the FCC approving “significant foreign investments.”

Booker, Warren and Schiff requested that the FCC issue a “formal notice to Paramount by July 1 that the transaction may not close” while the review of the foreign investments is underway.

Paramount disclosed in that filing that the merged Paramount-WBD would be 49.5% owned by foreign investors, with approximately 38.5% of the equity in the new company held by the sovereign wealth funds of Saudi Arabia, Qatar and Abu Dhabi. Additionally, Paramount’s filing asked the FCC to approve up to 100% foreign equity ownership in its broadcast licensees.

Congress imposed a 25% limit on direct foreign ownership of U.S. TV and radio stations without prior approval from the FCC. The senators noted in their June 18 letter to Carr: “Under FCC rules and procedures, the Commission, through the Committee on the Review of Foreign Participation in the U.S. Telecommunications Services Industry, is now required to work with other executive agencies to assess the potential national security and foreign policy risks posed by that foreign ownership.”

The senators wrote in the letter: “The Commission has an obligation to honestly answer a fundamental question: whether placing 49.5 percent of the equity in the parent company of CBS, CNN and 28 television stations in the hands of three foreign governments serves the American public. We are prepared to pursue all available avenues – legislative, supervisory and judicial – to ensure that this is the case.”

Variety has contacted the FCC for comment.

In addition, the Justice Department’s Antitrust Division announced on June 12 that it would close its investigation into Paramount-WBD, without imposing any divestiture or other concession demands on the part of Paramount Skydance. Senior DOJ officials took action to stop the Paramount-Warner Bros. discovery deal before the team of lawyers investigating the case could make a recommendation — and those lawyers were “leaning” toward recommending that the DOJ should file a lawsuit to block the merger, the Wall Street Journal reported. Asked for comment on the Journal report, a DOJ spokesperson said: “The Antitrust Division conducted a thorough investigation to assess whether the proposed transaction would harm competition. The investigative report found that the transaction will increase competition in the media and entertainment ecosystem, benefiting American consumers and workers.” In response to the WSJ report, Warren said in a statement: “The American people need to know whether this merger was approved as a political favor. This smacks of corruption.”

In March, Booker and six other Democratic senators wrote to Carr demanding that the FCC conduct a “thorough review” of the foreign investments from the Paramount-WBD deal and expressing concern about Carr’s public comments that the foreign investments warranted only a “very quick, almost pro forma review.”

In the June 18 letter, the three senators noted: “Paramount’s petition seeks much more than approval for the 49.5 percent total foreign investment. The media conglomerate is seeking prior approval for each foreign investor to increase its individual stake to 20 percent in the future, which, if each of the Sovereign Wealth Funds were to exercise that option, could result in up to 100 percent total foreign ownership of one of the nation’s largest broadcast media companies.”

While such prior approval is standard as a procedural matter, “the nature of the request is unprecedented,” Booker, Warren and Schiff wrote. “It seeks indefinite authorization for foreign government expansion into the parent company of CBS, CNN and 28 television stations. Preliminary approval was never intended to authorize the wholesale transfer of control of one of America’s most important news organizations to investors linked to foreign governments, without a finding that such a transfer would serve the public interest and not threaten national security.”

Paramount Skydance said in SEC filings that the three Middle Eastern sovereign wealth funds “have agreed to waive all governance rights – including board representation – associated with their non-voting equity investments.” The company claims the Ellison family and RedBird Capital Partners will have 100% control over a Paramount-Warner Bros. merger. Discovery.

The senators said the FCC has rejected Paramount’s request for up to 100% foreign ownership of Paramount-Warner Bros. to allow, “out of hand” must be rejected. They wrote: “Paramount’s assertion that this transaction ‘will not raise national security, law enforcement, foreign policy, or trade policy concerns’ is not a legal determination that the Commission can accept without investigation.”

The three senators noted in their letter that Saudi Arabia’s public investment fund is controlled by Crown Prince Mohammed bin Salman, “whom the U.S. intelligence community concluded ordered the killing of Washington Post journalist Jamal Khashoggi.”

On April 29, the Justice Department’s National Security Division notified the FCC that the Committee on Review of Foreign Participation in the U.S. Telecommunications Services Industry had begun reviewing the Paramount petition seeking relief from foreign ownership rules. According to the three Democratic senators, the committee’s investigation could last until the end of September, according to the timeline. If potential national security risks are identified, a second 90-day review period would follow.

“Paramount’s stated intention to complete the deal by July is grossly inconsistent with a legally mandated national security review that may not yet have begun,” the senators wrote in the letter to Carr. “Additionally, Paramount has publicly characterized its FCC filing as not being a condition of closing, signaling its intent to complete the acquisition before the Commission makes a public interest decision.”

In their letter to Carr, Booker, Warren and Schiff also asked the FCC to confirm that the review by the Committee for the Assessment of Foreign Participation in the United States Telecommunication Services Sector is ongoing and to “provide an expected timeline for its completion.” The senators also asked the FCC “to confirm whether the attorney general [Todd] Blanche is serving as chairman of the committee for the purposes of this review, and if he has not recused himself, identify the basis on which he is participating in a national security review with direct financial implications for sovereign wealth funds with documented ties to the Trump administration.”

The full text of the senators’ letter is here this link.